Determining Site Potential

Don't overlook these tried-and-true tips to maximize land development projects.

Can a desired development project be built on the land chosen? Commercial real estate investors and developers must ask this fundamental question early in the site-selection process. By taking into account a site's environmental characteristics, stormwater management and treatment requirements, utility access, impact fees, easement encumbrances, traffic issues, and zoning regulations, investors and developers accurately can assess a project's feasibility.

Site Analysis Guidelines
The following tips help owners and developers assess a site's development potential, whether it is an office park, chain restaurant, shopping center, or multifamily property.

Perform Thorough Due Diligence. Many developers, especially retailers, clamor for well-located infill sites, so a high percentage of new construction is tear-down-and-rebuild projects. Yet redevelopment sites can be very tricky. Surprises such as soil contamination and hidden utility lines can be costly if discovered after construction commences. Thorough due diligence, including a Phase 1 environmental study, is necessary.

Comply With New Regulations. Redeveloped sites lose their grandfather status once the original buildings are torn down, and new uses must comply with today's requirements. Ordinance changes can impose constrained driveway access, enlarged setbacks or buffers, and other restrictions, so existing buildings are not always indicative of what can be built back.

Avoid Land-Driven Projects. Land-driven development projects often originate with family members who have inherited farms or other large undeveloped land parcels. In most cases, the due diligence process is overlooked because no title attorney or lending institution is involved to impose a proper investigation. Yet myriad problems may exist. For instance, portions of the land may have environmental constraints, and cleaning up tainted soil and rock or contaminants may be costly. It's important to remind land owners who wish to develop their existing parcels that a site evaluation is critical.

Look Beneath the Surface. Remediation is the burden of anyone who owns a contaminated site, even if the current owner isn't responsible for the pollution. Developers should be aware of potential problems before purchasing a site by ordering a Phase 1 environmental analysis to discover what secrets the soil holds.

Check for Jurisdictional Wetlands. As defined by the U.S. Army Corps of Engineers, wetlands are not just areas of standing water; they also include woodlands where groundwater rises to a certain height underneath the ground's surface during the growing season. A certified wetlands delineator should check the development site, because ground cannot be disturbed within a designated wetlands area.

Know Stream Buffer Regulations. In addition to wetlands, many state and local jurisdictions administer stream buffer regulations, which prohibit land disturbance within 50 feet to 100 feet of even intermittent streams. Thus, frequently intermittent streams running through a site can disqualify it from certain uses such as big-box retail. Local regulations experts can investigate a site's characteristics and assess its stream buffer requirements.

Confirm Air-Quality Regulations. Air quality rears its head in some land development projects. For example, any 750-car-or-more parking facility must file a report demonstrating air-quality standards compliance with the state environmental agency. The approval procedure on this can take up to 90 days.

Take Measures to Reduce Impact Fees. Local governments charge developers impact fees for water and sewer connections, school construction, and transportation improvements to recover growth's cost to the community. The existence and amount of impact fees varies widely from municipality to municipality. For example, an analysis of a proposed 100,000-square-foot retail center in two different municipalities found that impact fees would be around $10 per square foot in one location and $3.50 psf in the other.

However, developers often can reduce impact fees by applying for building improvement credits, such as deducting the cost of widening a road from the transportation impact fee. Developers also should investigate reimbursement eligibility. Some municipalities reimburse developers for road construction and utility extensions if such facilities are part of a city's plan.

Beware Prescriptive Easements. Developers can determine easements' existence by performing a title search, but such searches typically won't uncover prescriptive easements, or nonrecorded uses of a property. For example, if an adjoining property owner has used a driveway over the subject property for a 20-year period, he may have a prescriptive easement over the property, even if the agreement wasn't formally recorded. Since prescriptive easements are legally enforceable, developers should be aware of all nonrecorded agreements on the site.

Understand Local Flood Zone Regulations. Failing to understand flood zone regulations is one of the greatest development pitfalls, especially since regulations vary widely. For instance, some jurisdictions allow developers to fill in the fringes of a flood plain while others won't.

Many jurisdictions enforce flood plain development standards that are stricter than Federal Emergency Management Agency requirements. Although FEMA oversees the National Flood Insurance Program, local, not federal, ordinances determine development standards; thus, developers must know local jurisdictions' particular requirements.

Deal With Stormwater Management Issues Upfront. As regulations change, developers are realizing that it is much easier to deal with stormwater management facilities at the beginning of a project. Typically developers must allocate between 6 percent and 10 percent of a site for stormwater management. It is more cost-effective to allot this land for ponds, sand filtration systems, or bioretention facilities before starting construction. Creating a master stormwater management plan can aid the process (see sidebar).

During the construction phase, stormwater detention basins often are required to deal with runoff temporarily. Developers need to learn a jurisdiction's runoff control regulations and comply with the requirements.

Consider Locating Stormwater Facilities Underground. In cases where the land's opportunity cost is high, such as urban infill or redevelopment projects, locating treatment facilities underground may be the only reasonable choice. While costing four times or more than equivalent aboveground facilities, underground stormwater treatment frees the entire site for development.

Know About Adjacent Zoning and Master Development Requirements. On-site buffer requirements may depend on the adjacent land's use. Also, adjoining development can affect stormwater runoff, utility extensions, street exposure, and vehicular access both during and after development.

Issues also arise when building in master-planned developments. Structures within such communities must adhere to the master developer's specific restrictions. Generally, these are aesthetic in nature, such as height and signage restrictions.

Check for Overlay Zones. Overlay zone requirements apply in addition to the underlying zoning and frequently are missed in site investigations. These extra regulations protect watersheds, historic districts, scenic views, transportation corridors, and airport fly zones. For example, special highway overlay districts might prohibit tree removal for the first 100 feet along a highway's edge, or watershed protection might impose a limit on the amount of pavement or other impervious surface a project can include.

Obtain Driveway Access Permits. Developers should discuss driveway access permits with the local transportation department, as restrictions against new driveway cuts on certain roads seriously can affect future customers' access. Also, developers often must construct additional improvements to enhance the adjoining road system's capacity.

John R. McAdams

John R. McAdams is president of the John R. McAdams Co., a land development design firm in Research Triangle Park, N.C. Contact him at (919) 361-5000 or Managing Stormwater to Maximize Land When East West Partners Management Co. planned Meadowmont of Chapel Hill, its flagship mixed-use community, it sought to optimize the land\'s development yield. The developer followed a master stormwater management plan to comply with Chapel Hill, N.C.\'s regulatory requirements while maximizing the available land. Because the 435-acre project is located within the protected Jordan Lake watershed area, state and local regulations mandated different stormwater quality treatment for different aspects of the development. Thus, the developer divided the site into a high-density commercial area that required stormwater quality facilities and a low-density residential area that did not. The state permitted no more than 70 percent paved surface coverage in the high-density area and no more than 24 percent in the low-density area. Chapel Hill imposed stricter regulations, allowing only 50 percent impervious surface coverage in the high-density area to control pollution in the drinking water supply. To provide water features that met quality and quantity requirements while optimizing the available land, East West Partners approached the development as a whole rather than as individual parcels. Working with a land development design company, the developer located three ponds in high-visibility areas on various parcels that the Meadowmont Owner\'s Association would own and maintain. In contrast, separate stormwater plans for individual parcels might have resulted in 10 or more ponds, compromising available land and increasing both construction and facility maintenance costs. To track impervious surface limitations during construction, the land development design company created an accurate monitoring system that tracked each parcel and individual residential lot\'s paved area, including sidewalks, parking spaces, bike trails, landscape lots, and roads. When parcels were sold or developed, engineers inserted the impervious surface information into a spreadsheet and sent it to East West Partners, as well as Chapel Hill\'s planning department. Results and Benefits The benefits of starting with a master stormwater management plan are numerous, including no wasted land. By knowing the Meadowmont development\'s pond locations upfront, East West Partners could plan around them effectively. In addition, prior to purchase buyers know a parcel\'s precise impervious surface allocations, as well as where stormwater will be directed and the location of each parcel\'s drainage boundaries. At Meadowmont, the developer overlapped the individual basins\' drainage boundaries, allowing buyers the flexibility to build on high-density area parcels without worrying about getting the exact amount to draw to a specific basin. Also, once buyers purchased parcels, they could sell spare impervious surface allocations to other parcel owners located within the same sub-watershed (high- or low-density area), thus maximizing their investment. Ultimately, East West Partners\' potential buyers were better informed to make qualified decisions about development before closing their land purchases. East West Partners maximized Meadowmont\'s available land by implementing a stormwater management and treatement plan prior to development. Credit: John R. McAdams Co.


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